Griffin FOM 10e Ch03 PPT Instructor Final
Griffin FOM 10e Ch03 PPT Instructor Final
Griffin FOM 10e Ch03 PPT Instructor Final
Management
Chapter Three: Planning and Strategic
Management
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Warm Up
• Carnival Cruise Lines has had a number of problems in recent years, most
notably with the Carnival Triumph (in the Gulf of Mexico) and the Costa
Concordia. In both cases Carnival was widely criticized for its poor approach
to crisis management.
• Most recently, the cruise industry faced backlash when passengers were
quarantined on ships during the Covid-19 pandemic. Who was the cruise line
most responsible to when they made the decision to keep passengers and
crew at sea for weeks?
− Passengers
− Crew
− Stockholders
− Governments
− The general public
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Learning Objectives (1 of 2)
By the end of this chapter you should be able to:
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Learning Objectives (1 of 2)
By the end of this chapter you should be able to:
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Figure 3.1 The Planning Process
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3-1a Organizational Goals (1 of 2)
• Decision making:
• Is the cornerstone of planning
• Is the catalyst that drives the planning process
• Underlies the formulation and implementation of all
plans
• Planning:
• Occurs within an environmental context
• Mission:
• A statement of an organization's fundamental purpose
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3-1a Purpose of Goals (2 of 2)
• Goals serve four important purposes:
1. Provide guidance and a unified direction for people in the
organization.
2. Affect other aspects of planning.
− Goal setting affects good planning and good planning
facilitates goal setting.
3. Source of motivation for employees.
− Employees work harder if attainment is likely to result in
reward.
4. Mechanism for evaluation and control.
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3-1b Kinds of Organizational Plans
• Strategic: A goal set by and for an organization’s top
management. Focuses on broad, general issues
− Reduce carbon emission by 20% by 2030
• Tactical: A goal set by and for an organization's middle
managers. Focus on actions needed to achieve strategic
plan
− Convert facility to solar power and add green roof
• Operational: A goal set by and for an organization’s lower-
level managers. Short-term issues tied to tactical plan
− Solicit bids for solar cells
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Knowledge Check 1
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Knowledge Check 1: Answer
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3-2 The Nature of Strategic Management
• Strategy: A comprehensive plan for accomplishing an
organization’s goals.
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3-2a The Components of Strategy
• Distinctive competence: An organizational strength
possessed by only a small number of competing firms
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3-2b Types of Strategic Alternatives (1 of 2)
• Most businesses today develop strategies at two distinct
levels:
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3-2b Types of Strategic Alternatives (2 of 2)
• Drawing a distinction between strategy formulation and
strategy implementation is also instructive
• Strategy formulation
• The set of processes involved in creating or determining
an organization’s strategies; it focuses on the content of
strategies
• Strategy implementation
• The methods by which strategies are operationalized or
executed withing the origination; it focuses on the
processes through which strategies are achieved
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Poll 1
Think about the many big businesses that impact your life today, such as
technology, automotive, and retail. Which type of strategy do you think the
founders of these types of companies started with?
A. Business-level
B. Corporate-level
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Discussion #1
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3-3 Using SWOT Analysis To Formulate
Strategy
• SWOT
− An acronym that stands for strengths, weaknesses,
opportunities, and threats
• SWOT analysis is a careful evaluation of an organization’s
internal strengths and weaknesses as well as its
environmental opportunities and threats.
• In SWOT analysis, the best strategies accomplish an
organization’s mission by (1) exploiting an organization’s
opportunities and strengths while (2) neutralizing its threats
and (3) avoiding (or correcting) its weaknesses.
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Figure 3.2
SWOT Analysis
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3-3a Evaluating an Organization's Strengths
• Organizational strength:
• A skill or capability that enables an organization to
create and implement its strategies.
• Distinctive competence:
• A strength possessed by only a small number of
competing firms.
• Organizations that exploit their distinctive competencies
often obtain a competitive advantage and attain above-
normal economic performance.
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3-3b Evaluating an Organization’s
Weaknesses
• Organizational weaknesses:
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Discussion #2
Develop a SWOT analysis for your university.
Strengths Weaknesses
Opportunities Threats
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3-4a Generic Strategies
• According to Harvard’s Michael Porter, organizations may pursue a
differentiation, overall cost leadership, or focus strategy at the business
level.
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Figure 3.3 The Product Life Cycle
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Discussion #3
Identify a product, or products, in each of the following
phases of the product life cycle. Why would you put a
certain product in a given category?
A. Introduction
B. Growth
C. Maturity
D. Decline
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3-5 Formulating Corporate-Level
Strategies (1 of 2)
• Decisions about which businesses, industries, and markets an
organization will enter, and how to manage these different
businesses, are based on an organization’s corporate strategy.
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3-5 Formulating Corporate-Level
Strategies (2 of 2)
• Diversification: The number of different businesses that an
organization is engaged in and the extent to which these
businesses are related to one another
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3-5a Single-Product Strategies
• Single-product strategy: A strategy in which an organization
manufactures just one product or service and sells it in a single
geographic market
• Strength:
• By concentrating its efforts so completely on one product
and market, a firm is likely to be very successful in
manufacturing and marketing that product.
• Weakness:
• If the product is not accepted by the market or is replaced
by a new one, the firm will suffer.
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3-5b Related Diversification
Related diversification: A strategy in which an organization
operates in several businesses that are somehow linked with one
another
• It reduces an organization’s dependence on any one of its business
activities and thus reduces economic risk
• By managing several businesses at the same time, an organization can
reduce the overhead costs associated with managing any one business.
• Allows for the exploitation of strengths and capabilities in more than one
business
• When organizations do this successfully, they capitalize on synergy
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3-5c Unrelated Diversification
Unrelated diversification: A strategy in which an organization
operates multiple businesses that are not logically associated with
one another
Advantages:
• Achieve stable performance over time due to business-cycle
differences among the multiple businesses.
• Resources can be allocated to areas with the highest return
potentials to maximize corporate performance.
Disadvantages:
• Lack of knowledge of the unrelated businesses
• Failure to exploit synergy, creating competitive disadvantage
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Poll 2
Apple has a variety of products, which they sell around the world. Many of these
products are sold in their own Apple stores, and others in a variety of retailers,
including online. Which type of corporate-level strategy does Apple use when
selling their products?
A. Single-product strategy
B. Related diversification
C. Unrelated diversification
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Knowledge Check 2
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Knowledge Check 2: Answer
• Can an organization have too much diversification? Are there disadvantages to
diversification?
Research suggests that unrelated diversification usually does not lead to
high performance. First, corporate-level managers in such a company
usually do not know enough about the unrelated businesses to provide
helpful strategic guidance or to allocate capital appropriately. To make
strategic decisions, managers must have complete and subtle
understanding of a business and its environment. Second, because
organizations that implement unrelated diversification fail to exploit
important synergies, they may be at a competitive disadvantage compared
to organizations that use related diversification.
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3-5d Managing Diversification (1 of 3)
• Portfolio management techniques: Methods that diversified
organizations use to determine which businesses to engage in
and how to manage these businesses to maximize corporate
performance
• Two important portfolio management techniques
• BCG matrix
• GE Business Screen
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3-5d BCG Matrix (2 of 3)
• BCG matrix: A framework for evaluating businesses relative to
the growth rate of their market and the organization’s share of
the market
• Dogs: Businesses that have a very small share of a market
that is not expected to grow
• Cash cows: Businesses that have a large share of a market
that is not expected to grow substantially
• Question marks: Businesses that have only a small share of
a fast-growing market
• Stars: Businesses that have the largest share of a rapidly
growing market
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Figure 3.4 The BCG Matrix
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3-5d GE Business Screen (3 of 3)
• GE Business Screen: A method of evaluating businesses
along two dimensions
1. Industry attractiveness
2. Competitive position
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Figure 3.5
The GE
Business
Screen
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Group Activity
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3-6a Tactical Plans
• Tactical plans: Plans aimed at achieving tactical goals
and developed to implement parts of a strategic plan; an
organized sequence of steps designed to execute
strategic plans
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3-6b Executing Tactical Plans
• To properly execute a tactical plan, them manager must:
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Table 3.1 Types of Operational Plans
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3-7a Single-Use Plans
• Single-use plan: Developed to carry out a course of action that
is not likely to be repeated in the future
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3-7b Standing Plans
• Standing plan: Developed for activities that recur regularly over a
period of time
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Figure 3.6 Contingency Planning
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Discussion #4
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Summary (1 of 2)
Now that the lesson has ended, you will have learned how to:
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Summary (2 of 2)
Now that the lesson has ended, you will have learned how to:
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